Realty major DLF saw nearly 50% cancellations of gross sales in the first nine months of FY17, sparking concerns among investors.
At an investor presentation, DLF said, out of Rs 1,550 crore gross sales booked in the first nine months of the current fiscal, it saw cancellation of Rs 790 crore, effectively reducing bookings to Rs 760 crore. Of the total cancellations, Rs 390 crore were in the December quarter. In the first quarter, the cancellations were even higher than the new sales.
On Wednesday, the DLF stock tanked 6.99% to Rs 137.15 on NSE. Most real estate developers rarely report cancellations in India. When analysts tried to probe for the reasons for high cancellations, company officials could not offer anything specific. However, analysts said falling property prices is the main reason and it could intensify further if the demand stayed weak.
DLF reported weak numbers for the December quarter and the management said the outlook is subdued for the next few quarters. Sales fell 29% year-on-year to Rs 2,178 crore and net profit by 44% to Rs 98 crore. Given high negative cash flows, debt is increasing quarter after quarter. End-December, its gross debt jumped Rs 1,000 crore to Rs 27,220 crore from the preceding quarter.
Credits ET Realty